Unions: Good Ol' Days or Part of Ford's Demise?

By

Amy Menefee

September 20, 2006 - 4:55pm

When an American auto manufacturer gets in trouble, journalists are quick to declare the American way of life is dying.

Despite the growth and health of Honda and Toyota plants employing American workers, not to mention a strong economy with 4.7-percent unemployment, network reporters often turn to nostalgia and overlook unions’ negative impact on the industry.

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“Used to be a union job for one of the Big Three was a guarantee of a good financial future,” said NBC’s Brian Williams on the September 14 “Nightly News.”

Journalists blamed SUVs, gas prices and foreign competition for “putting the brakes on” the American dream, but the union label was missing in most network news coverage of Ford’s (NYSE: F[2]) recent cutbacks.

“Ford has to do something. It’s headed for a multibillion-dollar loss this year, largely because the products it offers are not in sync with the times,” said ABC’s Dean Reynolds on the September 15 “Good Morning America.”

ABC, NBC and CBS aired 14 stories between September 14 – the day of Ford’s announcement – and September 19. Only a few times did journalists explicitly point to exorbitant union contracts as a reason for the company’s downward slide. The majority of stories focused instead on Ford’s market share and SUV production.

“How did Ford find itself in such a financial mess?” anchor Katie Couric asked business reporter Anthony Mason on the September 14 “CBS Evening News.” Mason answered: “Its sales have been slipping very badly, worse than expected. Their truck sales in July were down 45 percent. So this company needs radical surgery to survive.”

But Ford’s woes, like those of General Motors (NYSE: [3]GM), aren’t just the result of slipping truck sales. In an August 29 WebMemo, Heritage Foundation analysts Tim Kane and James Sherk wrote, “The slow demise of General Motors (GM) is visibly intertwined with the inefficient labor contracts that the United Auto Workers (UAW) secured in decades past.” As the Business & Media Institute [4]noted, GM estimated that its cost per worker, including benefits, was more than $70 per hour.

CBS’s Mason was one of few in those 14 network stories who explained that “Ford’s union contracts are a big part of the problem.” “A Ford worker earns on average nearly $65 an hour,” Mason said on the September 15 “CBS Evening News.” “In contrast, Toyota pays its American workers just $45 an hour.” When those wages plus benefits are calculated for a year, that’s $135,200 for Ford compared with $93,600 for Toyota – a difference of more than $41,000 per year.

Death Knell for the American Dream?

Despite evidence that unions’ heyday has passed – just 12.5 percent of American workers are in unions nowadays – journalists continued to heap nostalgia on the old days of industry.

On the September 14 “Nightly News,” NBC’s Brian Williams posed this question to CNBC’s Phil LeBeau, who covers the auto industry. “Phil, used to be a union job for one of the Big Three was a guarantee of a good financial future. These companies are part of America. How should people feel about this news?”

CBS even brought CNN’s Lou Dobbs, who frequently accuses businesses of waging a “war on the middle class,” on the September 15 “Early Show” to lament the collapse of working America. “This simply adds to the pressure on working men and women across the country,” Dobbs said. Co-host Hannah Storm later added, “Wow. One of the oldest American companies, part of the American dream, and let’s hope they survive and get back on their feet.”

But as Kane and Sherk pointed out, “the union philosophy sees the economy through a 1950s lens.” The economic analysts explained that “it assumes monopoly power for employers, lifetime employment for workers, and non-unique (lower-skilled) labor. Consequently, unions tend to prosper only in the rare cases where all three conditions exist – and increasingly rare situation in the modern economy.”

ABC’s John Donvan called attention to that stark truth on the September 19 “Nightline.” He asked the wife of an Ohio Ford employee, “Is maybe the catch on this that the money is phenomenal and the benefits are phenomenal and that means that Toyota can make cars so much cheaper?” The woman replied: “Well, the benefits are phenomenal. I don’t think – I hope that’s not – I never looked at it like that.”

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